July 23, 2011

Obama Admits the Obvious: The GOP Is Unreasonable

To a lot of people, the most striking thing about President Obama’s press conference on Friday evening was his tone. He seemed visibly angry with House Speaker John Boehner for ending their negotiations over the construction of a large deficit reduction deal.

But to me the most striking thing was a three-word phrase Obama used to describe himself towards the end: “A Democratic president.”

Obama frequently tries to position himself as a post-partisan figure, standing astride the two parties and above the fray. He uses phrases like “the problems of Washington” and “typical partisan bickering,” portraying himself as the grown-up in the room ready to do what neither side will not, in order to look out for the public’s best interest. It’s a posture that reinforces the perceptions of the Joe Public and the conventions of Joe Pundit -- and probably helps his popularity, too.

But that's not really the way debates have been playing out lately, particularly in this instance. It's the Republican threat to block an increase in the debt ceiling, something even Ronald Reagan on multiple occasions, that has precipitated this debate and, in the process, risked an economic calamity. And it’s the Republican resistance to raising new revenue, something else that Ronald Reagan did a few times, that has made a deal so hard to achieve.

On Friday night, at least, Obama seemed to understand that -- and, more important, was willing to say that.

For the last twelve hours, the principals and advisers to Obama and Boehner have argued over which side acted in bad faith. Boehner has described the White House position as “jell-o.” In his version of events, the two sides had an agreement in place on both new revenue and spending cuts. But then the White House, reacting to angry Democrats, started demanding more revenue still – and that’s when Boehner decided it was time to move on. “It’s the president who walked away from his agreement and demanded more money at the last minute," the Speaker said.

Obama, for his part, made a point of noting that he had called Boehner on Thursday night, waiting to hear from him, but got no answer until Friday afternoon, at 5:30, when the Speaker told him he was no longer interested in working on their deal. Aides later told reporters, including this one, that the negotiations had been fluid all along – that their request for more revenue on Thursday was merely the latest counter-offer in a series of back-and-forth exchanges that had been going on the entire time. They fully expected another counter-offer to continue negotiating from there.

"These were serious talks, with a lot of back-and-forth at the staff level over technical questions," a senior administration official said on Friday night. "It felt like good faith -- each side was making efforts to understand the other's political constraints, to feel each other's pain, to make accommodations where possible, on language and on policy."

While I’m inclined to believe that version, based on appearances, I realize that I’m a bit biased since I’m hearing this more from the administration’s perspective (I haven't had time to reach anybody in the Speaker's office directly). But put aside who really walked out on Friday and look at the big picture.

Nobody disputes that, except for the revenue part, the administration and Boehner had agreement over virtually everything else. And it was a deal that, like Obama’s previous offers, was strikingly tilted towards Republican priorities. Among the provisions Obama to which Obama had said yes, according to a senior administration official, were the following:

Medicare: Raising the eligibility age, imposing higher premiums for upper income beneficiaries, changing the cost-sharing structure, and shifting Medigap insurance in ways that would likely reduce first-dollar coverage. This was to generate about $250 billion in ten-year savings. This was virtually identical to what Boehner offered.

Medicaid: Significant reductions in the federal contribution along with changes in taxes on providers, resulting in lower spending that would likely curb eligibility or benefits. This was to yield about $110 billion in savings. Boehner had sought more: About $140 billion. But that’s the kind of gap ongoing negotiation could close.

Social Security: Changing the formula for calculating cost-of-living increases in order to reduce future payouts. The idea was to close the long-term solvency gap by one-third, although it likely would have taken more than just this one reform to produce enough savings for that.

Discretionary spending: A cut in discretionary spending equal to $1.2 trillion over ten years, some of them coming in fiscal year 2012. The remaining differences here, over the timing of such cuts, were tiny.

The two sides had also agreed upon a basic structure for the deal. The agreement was to specify the discretionary cuts and implement them right away. But the entitlement cuts and new revenue were to be in the form of instructions to Congress, leaving it committees and eventually each chamber to write the legislative language and enact the changes. To make sure Congress followed through, the agreement was to include a failsafe: If Congress failed to enact the changes and produce the necessary deficit reduction, then automatic reductions to Medicare and Medicaid as well as automatic tax increases (mainly, expiration of the Bush tax cuts for the wealthy) were to take effect.

The main difference, as both sides acknowledge, was over the size of the new revenue. They’d basically settled the basic principles of how to get the money: By closing loopholes, broadening the base, and lowering rates overall. Boehner had offered $800 billion, or roughly the equivalent of letting the upper income tax cuts expire. Obama had counter-offered $1.2 trillion. But even the $1.2 trillion Obama was seeking – and remember, this was a proposal over which the White House says it expected to keep negotiating – was still far less than the revenue either the Bowles-Simpson chairmen or the Senate’s Gang of Six, two bipartisan groups, had recommended. When this debate started, liberals like me were advocating a balance of spending reductions to new revenue of roughly one-to-one, which is what the Bipartisan Policy Center’s report by Pete Domenici and Alice Rivlin had recommended. But the president had been offering, right up through the end of these negotiations, plans that had ratios of roughly three-to-one or maybe worse.

The other key difference in the plans was over the specifics of that failsafe trigger: Boehner had asked it include repeal of two controversial elements of the Affordable Care Act, the requirement that everybody get insurance and the creation of the new board for adjusting Medicare payments. White House negotiators said they were taken aback, as it had never come up (at least at the staff level) before Thursday. They didn’t include that in their counter-proposal but, they said, they were willing to discuss other mechanisms.

Overall, the contents of this deal aren’t radically different from the one Obama and Boehner were discussing two weeks ago, the one that had conservatives like David Brooks understandably thrilled and liberals like Paul Krugman just as understandably aghast. (In a sense, it was "starving the beast" in the way conservatives have long imagined.) Now Republicans have walked away from that deal, twice. And keep in mind that even if Boehner had presented this deal, there's a very good chance he couldn't round up enough Republican votes to pass it.

It’s a striking contrast to the behavior of the Democrats, as Obama pointed out:

And I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything? Can they say yes to anything? I mean, keep in mind it’s the Republican Party that has said that the single most important thing facing our country is deficits and debts. We’ve now put forward a package that would significantly cut deficits and debt. It would be the biggest debt reduction package that we’ve seen in a very long time. ...

And to their credit, Nancy Pelosi, Harry Reid, the Democratic leadership, they sure did not like the plan that we are proposing to Boehner, but they were at least willing to engage in a conversation because they understood how important it is for us to actually solve this problem. And so far I have not seen the capacity of the House Republicans in particular to make those tough decisions.

It was a bit later he described himself as a “Democratic president,” as part of an aside to reporters:

I mean, I’ve gone out of my way to say that both parties have to make compromises. I think this whole episode has indicated the degree to which at least a Democratic President has been willing to make some tough compromises. So when you guys go out there and write your stories, this is not a situation where somehow this was the usual food fight between Democrats and Republicans. A lot of Democrats stepped up in ways that were not advantageous politically. So we’ve shown ourselves willing to do the tough stuff on an issue that Republicans ran on.

Obama has invoked that false storyline as much as any leader in recent times; if it's taken hold, he is partly to blame. But on Friday, he called it like it really is.

Update: With some tweaks to my language at the beginning and end, for clarity and emphasis.